HomeMy WebLinkAboutItem 7: Resolution Approving a Low-Income Rental Housing Tax Exemption - River RoadECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Action: A Resolution Approving a Low-Income Rental Housing Property
Tax Exemption for the Property Located Adjacent to 1410 River Road,
Eugene, Oregon (Evergreen Housing Development Group, LLC/ Applicant)
Meeting Date: November 26, 2012 Agenda Item Number: 7
Department: Planning and Development Staff Contact: Becky L. Wheeler
www.eugene-or.gov Contact Telephone Number: 541-682-5532
ISSUE STATEMENT
The City Council is asked to approve a resolution for a 20-year low-income rental housing property tax
exemption for River Road Apartments, located near 1410 River Road, map/lot number 17-04-13-
33/04601. The developer of the project is Evergreen Housing Development Group, LLC (Evergreen).
Evergreen entered into a purchase and sale agreement for acquisition of the property with Schmitz
Homeplace, LLC in June 2012.
BACKGROUND
The City of Eugene uses federal and local subsidies to promote public-private partnerships that create
housing affordable to low-income persons. Affordable housing developers often utilize the 20-year low-
income rental housing property tax exemption and the City’s systems development charge waivers to
create housing affordable to low-income residents. In October of 2012, Evergreen Housing
Development Group, LLC applied for this tax exemption for a project located south of Beltline on River
Road.
The Eugene-Springfield 2010 Consolidated Plan presents a strategic vision for housing and community
development from July 2010 to June 2015. The goals, strategies, and activities outlined in the
Consolidated Plan are based on priorities identified through an analysis of community needs and an
extensive community outreach process. The 2010 Consolidated Plan identified a need for affordable
housing for low-income persons (those at or below 80 percent area median income [AMI]) in Eugene. In
turn, the City set a goal of developing 500 new units of affordable housing by June 2015. To date, 136
units have been completed in three developments. An additional 107 units are anticipated to be complete
prior to 2015 as part of Bascom Village and Stellar Apartments. The addition of the proposed 216
affordable units would move the City closer to the Consolidated Plan goal.
Eugene’s Housing Needs
Eugene’s poverty rate is more than 19 percent, and housing costs in the Eugene-Springfield area have
risen sharply over the past 20 years. In addition, there are a growing number of seniors, persons with
disabilities, and others who are unable to work given the highly competitive job market. These factors,
combined with a relatively tight housing market, have resulted in a large number of households with
moderate or severe housing cost burdens. The cost of housing, including utility costs is generally
considered to be affordable when it equals no more than 30 percent of household income. More than 44
percent of Eugene households have a housing cost burden.
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Eugene currently experiences a lack of housing that is affordable for people with low incomes. The
March 2012 Envision Eugene recommendation includes expanding the variety of housing types and
prices available by moving toward a housing mix of 55 percent single-family/45 percent multi-familyin
order to support the vision set out in the Envision Eugene pillars of providing housing that is affordable
for all income levels. More than 6,300 new units of multi-family housing will be needed to
accommodate the next 20 years of growth in Eugene.
Summary of requested tax exemption for River Road Apartments
Evergreen Housing Development Group, LLC has requested the 20-year low-income rental housing
property tax exemption to build River Road Apartments. The project includes 216 apartments affordable
to households earning 60 percent AMI or less, and will be located on a vacant 7.7 acre site south of
Beltline on River Road. Lower income households can include full-time workers in jobs making
minimum wage or slightly higher, new college graduates, young professionals, families with children,
seniors on limited or fixed incomes, or people with disabilities, among others.
The project concept includes 13 three-story buildings consisting of 82 one-bedroom, 74 two-bedroom,
and 60 three-bedroom units. The developer aims to use energy efficient appliances and water saving
features on site. The preliminary site plan includes common and play areas, covered bike parking, a
leasing office building that includes community and fitness rooms, and community garden areas. Rents
are anticipated to range between $606 and $832 and will meet requirements of the Low-Income Housing
Tax Credit (LIHTC) program. Current fair market rents for Eugene-Springfield are between $637 and
$1,128.
The property was annexed into the City in 2006. In 2007, a land use decision was issued approving a
zone change from R-1, low density residential to R-2, medium density residential, consistent with the
Metro Plan. Medium density residential lands have a density range of 10 to 28 units per acre. River
Road apartments maximizes the allowable R-2 base density onsite by providing 216 units. Evergreen
Housing has chosen not to take advantage of the controlled income and rent housing 150 percent density
increase allowed in Eugene Code 9.2740 that would increase the total potential unit count by more than
100 units.
Based on the current proposal, no land use applications will be required to move forward with
development. Final site and development plans will be reviewed at the time of building permit for
compliance with the multi-family development standards and other applicable development standards,
such as bicycle parking and landscaping.
While the project will primarily be funded with construction and permanent loans, the applicant has
submitted an application to Oregon Housing and Community Services (OHCS) and anticipates funding
the $26 million development, in part, with four percent LIHTCs and proceeds from tax exempt bonds
that will be issued by the State.
The River Road Community Organization expressed interest in providing public comments regarding
the proposal. In response, the City Council added a public forum to its agenda November 19, 2012, to
listen. Five people spoke at the public forum (four against the project, plus the developer) and two left
written comments. In summary, comments heard both in writing and in person relate to the scale of the
project and its compatibility with the neighborhood, increases in traffic, decreases in property values,
neighborhood safety and increases in crime, adequate stormwater capacity, and concern with providing a
local incentive to an out-of-town, for-profit developer. Some also provided comments that the
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development is inconsistent with the City’s Housing Dispersal Policy. The City Attorney has determined
the proposed housing is not considered subsidized housing for the purposes of the Housing Dispersal as
the policy defines low-income as those at 50 percent AMI and this development targets those at 60
percent AMI.
A decision to approve or deny this tax exemption request must be based on the criteria included in the
City’s Code.
Summary of the low-income rental housing property tax exemption program
The City adopted the low-income rental housing property tax exemption program in 1990. Since then,
Eugene has approved tax exemptions for more than 20 developments with over 1,000 units. In 2011, the
council unanimously approved extending the 20-year low-income rental housing property tax exemption
program for an additional 10 years. The approved ordinance also permits recipients to reapply for the
20- year low-income rental housing property tax exemption after the initial 20 year period has expired.
The council reviews each tax exemption request on a case-by-case basis. Most recently, the council
approved a low-income rental housing tax exemption for St. Vincent de Paul’s Stellar Apartments in
July 2012.
Approval of the low-income rental housing property tax exemption
If an application meets the substantive criteria [EC 2.939(2)(a)-(i) or EC 2.939(3)(a)-(e)], the City must
grant the exemption by resolution. A decision to deny the exemption cannot be made by simple motion
or inaction; it would need to be made by a resolution that explains how the applicant has failed to
demonstrate that the tax exemption meets applicable criteria for approval.
The requested exemption meets the substantive criteria [EC 9.239(2)(a)-(i)] as shown below and in the
Community Development Manager’s Report and Recommendation (Attachment A).
EC 2.939(2)
Upon receipt of the City Manager's recommendation, the council shall consider the
application and grant or deny the property tax exemption. The City Manager shall recommend approval
of an application, and the council shall grant the exemption upon determining satisfactory compliance
with or mitigation of the following criteria:
(a) If unoccupied, the property:
1. Is offered for rental solely as a residence for low-income persons; or
2. Is held for the purpose of developing low-income rental housing;
The property, or portion thereof subject to the property tax exemption, will be occupied solely as a
residence for low-income persons. The property is currently vacant.
One hundred percent of the development, once constructed, will be offered to families and individuals at
60 percent area median income (AMI). Low-income is defined under Eugene Code 2.937 as “Income at
or below 60 percent of the area median income as determined by the State Housing Council based on
information from the United States Department of Housing and Urban Development.”
(b) If occupied, the property, or portion thereof subject to the property tax exemption, is occupied solely
as a residence for low-income persons;
The property is not occupied.
(c) The required rent payment reflects the full value of the property tax exemption.
Without the LIRPTE, the low rents cannot be achieved to meet limits prescribed by the Low-Income
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Housing Tax Credit LIHTC Program that will be used to fund development. Without the LIRPTE the debt
coverage ratio (net operating income divided by debt service) is 1.14, below the industry standards to
obtain conventional financing and to attract investors.
(d) The housing units on the property were constructed after February 12, 1990;
The housing units on the property are anticipated to be constructed in 2013.
(e) The policies set forth in the Standards and Guidelines for Low-Income Rental Housing Property Tax
Exemption adopted by council resolution;
The applicant has complied with the policies set forth in the Standards and Guidelines for Low-Income
Rental Housing Property Tax Exemption adopted by council Resolution No. 5028 (Attachment B).
(f) The proposed development is consistent with the City's housing dispersal policy.
The policies contained in the Housing Dispersal Policy apply to housing for persons at or below 50
percent of area median income. This development is for persons at 60 percent of area median income.
Therefore, those specific policies do not apply
(g) The proposed development does not cause displacement of low-income persons unless the City and
developer can reach agreement on provisions (to be provided by the developer) that reflect satisfactory
mitigation thereof;
The proposed development does not cause the displacement of low-income persons. The application is for
new construction on vacant land.
(h) The proposed development does not cause destruction of historic properties (as defined in section
9.0500 of this code);
No historic properties will be destroyed. The application is for new construction on vacant land.
(i) The proposed development is or will be required to be otherwise consistent with the Eugene Code and
adopted City regulations and policies.
The proposed development is consistent with this code and adopted City policies and regulations
reviewed under this application. Consistency with zoning, building, and other code requirements will be
addressed when building permit applications are reviewed by Building Permit Services staff.
RELATED CITY POLICIES
The proposed tax exemption supports multiple City priorities and policies including the Eugene-
Springfield 2010 Consolidated Plan, Growth Management Policies, the Housing Dispersal Policy, and
Envision Eugene.
Eugene-Springfield 2010 Consolidated Plan
-As noted previously, the proposed project directly
supports the goals of the plan by creating 216 units for low-income families and individuals.
Eugene Adopted Growth Management Policies
- The City of Eugene affordable housing development
programs and River Road Apartments support multiple growth management policies including:
Promote construction of affordable housing.
Encourage in-fill, mixed-use, redevelopment, and higher density development.
Provide for a greater variety of housing types.
Support the existing Eugene Urban Growth Boundary by taking actions to increase density and use
existing vacant land and under-used land within the boundary more efficiently.
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Housing Dispersal Policy
- While the proposed housing is not considered subsidized housing for the
purposes of the Housing Dispersal Policy as the policy defines low-income as those at 50 percent AMI
and this development targets those at 60 percent AMI, the policy seeks to maximize housing choices for
low-income families and integrate subsidized housing throughout the City of Eugene. Evergreen
Housing is providing an additional 216 units of affordable housing along a transit corridor, close to
employment, schools, and services.
Envision Eugene
– The Envision Eugene Community Vision was endorsed by the City Council on June
13, 2012. The vision identifies strategies and goals (pillars) that help the City of Eugene plan for growth
over the next 20 years. The housing affordability pillar includes strategies to meet the growing and
changing housing needs of Eugene residents by increasing the proportion of multi-family housing in the
community (adjusting the housing mix), densifying residential development along key transportation
corridors, and supporting subsidized affordable housing developments. Continuing to provide property tax
exemptions to low-income rental housing developments was identified as an action to help successfully
implement these strategies.
COUNCIL OPTIONS
City Council may approve or deny the tax exemption.
CITY MANAGER’S RECOMMENDATION
The City Manager recommends the approval of the resolution granting a 20-year low-income rental
housing property tax exemption for the property located adjacent to 1410 River Road, Eugene, Oregon
(Assessor’s Property Account Number 1837937).
SUGGESTED MOTION
Move to adopt a resolution approving a 20-year low-income rental housing property tax exemption for the
property located adjacent to 1410 River Road, Eugene, Oregon (Assessor’s Property Account Number
1837937).
ATTACHMENTS
A.Report and Recommendation
B.Resolution 5028 - Standards and Guidelines for Low-Income Rental Housing Property Tax Exemption
C.Resolution to approve the tax exemption
D.Resolution to deny the tax exemption
FOR MORE INFORMATION
Staff Contact: Becky L. Wheeler
Telephone: 541-682-5532
Staff E-Mail: becky.l.wheeler@ci.eugene.or.us
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ATTACHMENT C
RESOLUTION NO. ______
A RESOLUTION APPROVING A LOW-INCOME RENTAL HOUSING
PROPERTY TAX EXEMPTION FOR PROPERTY LOCATED
ADJACENT TO 1410 RIVER ROAD, EUGENE, OREGON.
(EVERGREEN HOUSING DEVELOPMENT / APPLICANT.)
The City Council of the City of Eugene finds that:
A.
Evergreen Housing Development Group, LLC (the applicant), located at P.O. Box
31879, Seattle, Washington, 98103, has entered into Purchase and Sale Agreement with Schmitz
Homeplace, LLC, for the acquisition of real property located adjacent to 1410 River Road,
Eugene, Oregon, 97404 (Assessor’s Map 17-04-13-33; Tax Lot No. 04601; Assessor’s Property
Account Number 1837937). The applicant has submitted an application pursuant to Subsection
2.939(2) of the Eugene Code, 1971, for an exemption from ad valorem taxes under the City's
Low-Income Rental Housing Property Tax Exemption Program (Sections 2.937 to 2.940 of the
Eugene Code, 1971).
B.
The proposed development is expected to consist of 216 units to be constructed
on the property at rents affordable to 60% of area median income.
C.
The Community Development Manager of the Planning and Development
Department (the Manager), as designee of the City Manager, has prepared a Report and
Recommendation, which is attached to this Resolution as Exhibit A, recommending that the
application be approved and the exemption granted. In making that recommendation, the
Community Development Manager found that the applicant submitted all materials, documents
and fees required by the application and Section 2.938(1) of the Eugene Code, 1971, and is in
compliance with the policies set forth in the Standards and Guidelines adopted by Resolution No.
5028. In addition, as described more fully in Exhibit A, the applicant has complied with the
criteria for approval provided in Section 2.939(2) of the Eugene Code, 1971.
NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a
Municipal Corporation of the State of Oregon, as follows:
Section 1.
Based upon the above findings, and the findings in the Manager’s Report and
Recommendation attached as Exhibit A, the City Council approves the application of Evergreen
Housing Development Group, LLC for an ad valorem property tax exemption under the City's
Low-Income Rental Housing Property Tax Exemption Program for the property located adjacent
to 1410 River Road, Eugene, Oregon, 97404 (Assessor’s Map 17-04-13-33; Tax Lot No. 04601;
Resolution - Page 1 of 2
Assessor’s Property Account Number 1837937), for one, two, and three bedroom units to be
constructed and offered at rents affordable to 60% of area median income.
Section 2.
The land and residential units described in Section 1 above are declared
exempt from local ad valorem property taxation commencing July 1, 2013, and continuing for a
continuous period of twenty (20) years unless earlier terminated in accordance with the
provisions of Section 2.940 of the Eugene Code, 1971, which provides for termination after an
opportunity to be heard if:
2.1 Construction or development of the exempt property differs from the construction
or development described in the application for exemption, or was not completed by
January 1, 2020, and no extensions or exceptions were granted; or
2.2 The applicant fails to comply with provisions of ORS 307.515 to 307.523,
provisions of the Eugene Code, 1971, the Standards and Guidelines adopted by Council
Resolution No. 5028, or any conditions imposed in this Resolution.
The tax exemption shall be terminated immediately, without right of notice or appeal, pursuant to
the provisions of ORS 307.531 in the event that the county assessor determines that a change of
use to other than that allowed has occurred for the housing unit, or portion thereof, or, if after the
date of this approval, a declaration as defined in ORS 100.005 is presented to the county assessor
or tax collector for approval under ORS 100.110.
Section 3.
The City Manager, or the Manager's designee, is requested to forward a copy
of this Resolution to the applicant within ten days from the date of adoption of this Resolution,
and to cause a copy of this Resolution to be filed with the Lane County Assessor on or before
April 1, 2013. The copy of the Resolution sent to the applicant shall be accompanied by a notice
explaining the grounds for possible termination of the exemption prior to the end of the
exemption period and the effects of the termination.
Section 4.
This Resolution shall become effective immediately upon its adoption.
th
The foregoing Resolution adopted the 26 day of November, 2012.
_____________________________________
City Recorder
Resolution - Page 2 of 2
ATTACHMENT D
RESOLUTION NO. _____
A RESOLUTION DENYING A LOW-INCOME RENTAL HOUSING
PROPERTY TAX EXEMPTION FOR PROPERTY LOCATED
ADJACENT TO 1410 RIVER ROAD, EUGENE, OREGON.
(EVERGREEN HOUSING DEVELOPMENT / APPLICANT.)
The City Council of the City of Eugene finds that:
A.
Evergreen Housing Development Group, LLC (the applicant), located at P.O. Box
31879, Seattle, Washington, 98103, has entered into Purchase and Sale Agreement with Schmitz
Homeplace, LLC, for the acquisition of real property located adjacent to 1410 River Road,
Eugene, Oregon, 97404 (Assessor’s Map 17-04-13-33; Tax Lot No. 04601; Assessor’s Property
Account Number 1837937). The applicant has submitted an application pursuant to Subsection
2.939(2) of the Eugene Code, 1971, for an exemption from ad valorem taxes under the City's
Low-Income Rental Housing Property Tax Exemption Program (Sections 2.937 to 2.940 of the
Eugene Code, 1971).
B.
The proposed development is expected to consist of 216 units to be constructed
on the property at rents affordable to 60% of area median income.
C.
The Community Development Manager of the Planning and Development
Department (the Manager), as designee of the City Manager, has prepared a Report and
Recommendation, which is attached to this Resolution as Exhibit A, recommending that the
application be approved and the exemption granted. In making that recommendation, the
Community Development Manager found that the applicant submitted all materials, documents
and fees required by the application and Section 2.938(1) of the Eugene Code, 1971, and is in
compliance with the policies set forth in the Standards and Guidelines adopted by Resolution No.
5028. In addition, as described more fully in Exhibit A, the applicant has complied with the
criteria for approval provided in Section 2.939(2) of the Eugene Code, 1971.
NOW, THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a
Municipal Corporation of the State of Oregon, as follows:
Section 1.
Notwithstanding the findings in the Executive Director’s Report and
Recommendation, the City Council denies the application of Evergreen Housing Development
Group, LLC for an ad valorem property tax exemption under the City's Low-Income Rental
Housing Property Tax Exemption Program for the property located at adjacent to 1410 River
Road, Eugene, Oregon, 97404 (Assessor’s Map 17-04-13-33; Tax Lot No. 04601; Assessor’s
Resolution - Page 1 of 2
Property Account Number 1837937), because the applicant has failed to demonstrate that it is
qualified for the tax exemption.
Section 2.
The City Manager, or the Manager's designee, is requested to forward a copy
of this Resolution to the applicant within ten days from the date of adoption of this Resolution,
along with a notice informing the applicant of the right to appeal in the manner set forth in ORS
34.010 to 34.100.
Section 3.
This Resolution shall become effective immediately upon its adoption.
th
The foregoing Resolution adopted the 26 day of November, 2011.
_____________________________________
City Recorder
Resolution - Page 2 of 2